We have been living in out home bought 5 years ago with an fha loan. We currently owe roughly 130k and the house is conservatively valued around 215k. While we have been able to update different parts of the house and alter the floor plan for the better, there are still some projects that need to be done to complete the remodel that would likely cost 10k (high estimate). After these being completed the house would conservatively be worth 215k. We would love to do something like an fha cash out loan and use this equity to purchase a multi family rental.
Should we ignore the projects that need completing and focus on finding a rental property, or should we take out a smaller loan to finish the house so that it will a praise for the highest price possible first? Any other suggestions welcomed too. Thanks
There is no upside in borrowing money to spend to get a higher appraisal. You never get back 100%.
Take a loan to invest and upgrade down the road with cash.
Completely agreed with @Thomas S.
I couldn't have said it better myself. There's a reason Kiyosaki says "your home is not an asset"
It depends on what the projects actually are but for the most part the posters above are right. The appraiser doesn't care whether you have carpet or hardwood. They don't care if you have $20 lights or $100 lights. That kind of stuff has no effect on an appraisal.
That being said, if you're talking about projects like adding a bathroom or finishing a basement, thats another story.
Ultimately, I would save your money and do the cash out refi. Then buy the investment property and let the rental income fund your projects on your home going forward. That way your tenants are paying for your home rehab projects instead of you paying for them. :-)